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HBOS has confirmed plans to raise Â£4bn (â¬5bn) from shareholders through a rights issue after the UK's largest mortgage lender announced writedowns of Â£2.8bn this year, almost four times the amount it wrote down in the whole of last year.

The bank confirmed the capital injection plan at its annual general meeting in Glasgow today.

HBOS shareholders will be offered two new shares for every five already held at an issue price of 275p per share, a 45% discount to the closing price of HBOS shares of 495.75p on April 28.

Dresdner Kleinwort and Morgan Stanley will fully underwrite the rights issue, subject to the approval of the bank's shareholders at an extraordinary general meeting in late June.

Morgan Stanley is one of four banks underwriting the Sfr15bn ($15bn) rights issue by UBS and it also split the underwriting fees on the €5.5bn rescue rights issue by French bank Société Générale with JP Morgan in February.

Dresdner has been HBOS' broker for about eight years.

The rights issue and a reduced dividend payout ratio of 40%, compared with 46% last year, will help the bank to increase its capital reserves. The mortgage lender said it aims to increase its tier one capital ratio to between 8% and 9%, with a core tier one ratio of between 6% and 7%, at the upper end of the UK banking sector.

HBOS' writedowns related mainly to asset-backed securities and floating rate notes in its treasury portfolio. The total includes a £970m pre-tax writedown from its trading book, compared with £227m last year. It also includes a £1.8bn post-tax writedown from its banking book, compared with £509m last year, according to the bank.

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The figures are small compared with Scottish rival RBS, which has written down £6bn this year, but as the UK's largest mortgage provider HBOS is considered to be more exposed to the worsening UK economy and property market, according to analysts.